What is Cryptocurrency Wallet? A Step-By-Step Guide for Beginners

What is Cryptocurrency Wallet? A Step-By-Step Guide for Beginners

Updated On Jan 16, 2021
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Are you interested to know about what cryptocurrency and cryptocurrency wallet is? If you are, then utilize this comprehensive guide to learn what a cryptocurrency wallet is and how it works.

What is Cryptocurrency Wallet?

A software program which stores public and private keys and Communicate with several blockchain that enable users for sending and receiving digital currency and know their balance. To point out, if you want to use Bitcoin as well as any another cryptocurrency, it is mandatory for you to have a digital wallet.

How Cryptocurrency Wallet Work?

Even though, there is a significant misconception on its work, Millions of people utilize cryptocurrency wallets. The digital wallets is discordant to traditional ‘pocket’ wallets as it does not store currency. As a matter of fact, currencies don’t get stored in any single location or exist anywhere in any physical form. All that exists are records of transactions stored on the blockchain.

Generally, cryptocurrency wallets are software programs which is useful for storing your public and private keys and intersect with several blockchain. Through this users can simply monitor their balance, make transactions and perform several operations.

When a person transfers bitcoins or any other digital currencies to you, fundamentally, they should sign off the coins ownership to your wallet’s address. To point out, spending those coins and unlocking the funds is possible only when the matching of private key stored in your wallet and the public address the assigned currency. If both the public and private keys match, there is increase in digital wallet balance as well as decrease among the senders. The transaction is signified simply by a transaction record on the blockchain and there is no actual exchange of real coins.

Categories of Cryptocurrency Wallet

1. Mobile Wallet

Coherent admittance on any mobile devices and extreme functions of the cryptocurrency wallet are noticed as a mobile wallet that absolutely based on the internet. Mobile wallet types are classified as cryptocurrency support, custody and platform. In cryptocurrency support, there exists multi and single cryptocurrency wallets. Next custodial an non-custodial categories comes under custody. To mention that, these mobile wallets are compatible with both Andriod and ios for your desired cryptocurrencies. Bitcoins and altcoins are significant utilized Mobile wallets today as they are mobile-based and simple to use.  

Advantageous Traits

I. Effective send and receive payments.    

II. Support of QR code scanning.

III. Private keys, Ease of use, Development community, Backup & security compatibility are concerned more in the mobile wallet.

2. Web Wallet

This essentially needs web access to manipulate. Web wallets so called hot wallets that can be accessed through various internet browsers like Google Chrome, Firefox, and IE via moving towards URLs. To specify that, web wallets may be hosted or unhosted and are dependent on your wallet preference.

Advantageous Traits

I. Rapid transactions

II. Pattern for minimum cryptocurrency savings

III. Let multiple cryptocurrency transactions and direct integration into an exchange.

3. Desktop Wallet

In terms of safety, desktop wallet is an efficient old storage method of Cryptocurrencies than the mobile and web wallet. To point out, most of the desktop OS such as Mac, Windows, Linux are having the installable software packs of desktop wallets for all cryptocurrencies. The desktop version is launched on the day first itself if any cryptocurrency that is almost grave. At present, there are various desktop wallets obtainable in the market but you should prefer the precise choice to maintain your cryptocurrency wallet as a more secure one.   

Advantageous Traits

I. Non seeking of energy source

II. Effortless utilization

III. Grabs and holds Private keys

IV. Absence of third-party server

4. Hardware Wallet

Hardware wallets, the name itself signifies that, it is make up of hardware devices generally to manage public addresses and also private keys where the fork is better than others. It is identical to a USB device which has an OLED screen and side buttons to navigate via the wallet interface. Besides, it comes with native desktop apps for various cryptocurrencies.   

Advantageous Traits

I. Ease and safe long-term cryptocurrency storage

II. Stronger security

Video Source : Blockgeeks

Are Cryptocurrency Wallets Secure?

Wallets are secure to varied degrees and the security level depends on the type of wallet you use (desktop, mobile, online, paper, hardware) as well as the service provider.

While utilizing any wallet, diligent security precautions need to be enforced and followed. Remember, no matter which type of wallet you use, if you lose your private keys, it results in losing of your money. Likewise, when hacking occurs on your wallet or you send money to a scammer, there is no way for the reverse transactions to rectify lost currency. Hence, it is mandatory take precautions and be very careful.

These two steps can prevent you in all cases.

I. Backup your wallet

II. Add extra security layers

To state, crypto-wallets seems to be identical while in comparison to other payment wallets. With this, it is best to store, exchange and exploit the digital currencies like bitcoin, ethereum, ripple etc. At Osiz technologies, a leading cryptocurrency wallet development company you can acquire best-in-class cryptocurrency wallet development services for all digital currencies. We chiefly focus to develop wallet with high security, scalability and reliability to stay in top at the cryptocurrency development business.

Hardware Cryptocurrency Wallet We Support

The following are the hardware wallets we support

1. Trezor

The safe place for your coins which is invented for your digital freedom . Information stored in online may be copied and stolen, so go offline and store your coins with Trezor. Transparent security and intuitive as well as convenient interface are its advantageous traits.

Coins Supported by Trezor

i. Bitcoin

ii. Litecoin

iii. DASH

iv. Zcash

v. Bitcoin Cash

vi. Bitcoin Gold

vii. Ethereum

viii. Ethereum Classic

ix. ERC-20 Tokens (tokens on the Ethereum blockchain)

x. Expanse

xi. UBIQ

xii. NEM

xiii. Namecoin

xiv. Dogecoin

xv. Testnet Bitcoin

2. Ledger Nano S

In security, both Trezor and Ledger are almost as strong as each other. Both the wallets is that they both generate your private key offline, using their screens and this is considered as the most vital features of them.

On the other hand, both Trezor and Ledger provide a recovery seed and ask you to setup a PIN to access them. If your wallet is lost, stolen or damaged, then your private key will be lost. This is what the recovery seed and PIN are for.

Coins Supported by Nano Ledger S

i. Bitcoin (BTC)

ii. Bitcoin Cash (BCH)

iii. Ethereum (ETH)

iv. Ethereum Classic (ETC)

v. Bitcoin Gold (BTG)

vi. Litecoin (LTC)

vii. Dogecoin (DOGE)

viii. Zcash (ZEC)

ix. Ripple (XRP)

x. Dash (DASH)

xi. Stratis (STRAT)

xii. Komodo (KMD)

xiii. Ark (ARK)

xiv. Expanse (EXP)

xv. Ubiq (UBQ)

3. NFC Tag

NFC tags are designed to sort any kind of data and plopped into almost any product, that let you to read them with a smartphone or another NFC-capable device. To point out, it enables the detection of unauthorized NTAG copies, thus offers simple but powerful product authentication method. Apart from these, we also support wearable hardware cryptocurrency wallets which is smart and safe and easy to everyone. Stay connect with our cryptocurrency developers and feel free to clarify your queries.

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